Letter to our co-investors 1Q23

Dear co-investor,

New year, new turmoil? The major stock markets of the world ended the first quarter of the year with solid gains, but overshadowed by a banking crisis not seen since 2008. Against this volatile backdrop, our Horos Value Internacional fund gained 6.0% in the first three months of the year, compared to a 5.4% rise in its benchmark index. Horos Value Iberia was up 6.1% over the period, compared to a 10.8% rise of its benchmark.

As usual, I would like to take this opportunity to update our longer-term performance. Since the inception of Horos (May 21, 2018), Horos Value Internacional has returned 34.0%, underperforming the 47.1% gain of its benchmark index, while Horos Value Iberia has returned 10.9%, slightly below the 13.4% return of its index. Moreover, since 2012, the returns achieved by this management team stand at 228% for the international strategy and 177% for the Iberian strategy, compared to 203% and 90% in their benchmark indices, respectively.

Despite these year-to-date gains, a turbulent March saw the abrupt fall of several U.S. banks, such as Silicon Valley Bank, and the most notable collapse of Credit Suisse in Europe. Are the central banks’ rate hikes the cause of this banking crisis? Are the cases of U.S. regional banks so different from what happened with Credit Suisse? Are there other underlying structural problems that explain these recurring crises in the sector? We will devote most of this first quarterly letter of 2023 to try to answer these questions and explain our approach to the financial sector.